Cuba’s First American-Owned Manufacturer Will Make Tractors

Cuba's First American-Owned Manufacturer Will Make Tractors
Two ex-IBMers are building a big red machine in a low-tech nation.
Ian Frisch
June 9, 2016 — 11:02 AM CEST

"Come on, boy! Get dressed! We got to go!" yells Horace Clemmons. He's
heckling his longtime friend and business associate, Saul Berenthal, who
sits cross-legged on a leather chair in the living room of Clemmons's
home in Paint Rock, Alabama. It's a Tuesday in mid-April, and the duo is
scheduled to give a presentation to a group of local investors about
their new business, Cleber. In February, the U.S. Department of the
Treasury approved Cleber's request to be the first U.S.-based company to
construct and operate a manufacturing facility in Cuba. They plan to
build low-tech tractors for small farms.
"All right, all right!" Berenthal says, grinning, stretching his vowels.
"But I need to see my choice of dress first." He stands up and saunters
into the guest bedroom. He's come from his home in North Carolina for
the event and is staying with Clemmons.
"You just have to choose if you want to wear the sport jacket or not,"
Clemmons calls after him in his slouchy drawl. A minute later, Berenthal
comes out. He's wearing slacks and a blue button-up shirt, untucked, the
collar loose and the cuffs buttoned.
"You look handsome, dude!" says Clemmons. Both men are in their early
70s, sinewy, buoyant with energy. Berenthal was born in Cuba in 1944 and
moved to the U.S. in 1960 after the revolution. He has slicked-back
hair, pale olive skin, and a swagger highlighted by incessant gum
chewing. Clemmons, an Alabama local, is decidedly more of a country boy,
with a short-sleeved, collared shirt tucked into straight-cut Levis,
wire-frame glasses, a baseball cap on his head, and posture as straight
as a tree trunk.
The two met in the early 1970s while working for IBM. Berenthal had a
sales position in the New York City office; Clemmons worked in Raleigh,
N.C., at the development branch. During a trip to Raleigh, Berenthal hit
a snag with a client and needed help over a weekend. Referred to
Clemmons, Berenthal drove to his home to find him in overalls, working
in the yard. "I thought, 'This is the guy that's going to fix my
problem?' " Berenthal recalls. But the guys clicked and, after Berenthal
transferred departments and moved to Raleigh, became close friends. In
1983 they left IBM to start Post Software International, a point-of-sale
software company. They sold the company in 1997 to Fujitsu for an
undisclosed sum, though it seems to have been enough for Clemmons to
build his current home, a 7,000-square-foot mansion made of cypress
logs, on a 2,200-acre plot.
Now the pair are back at the entrepreneurial grind. Since getting the
go-ahead from the U.S. government, they have been finalizing their first
tractor's design and sourcing materials, manufacturing prototypes to be
tested in Cuba, nailing down the construction logistics of their
facility, negotiating terms and conditions with the Cuban government,
and hoping to raise $15 million in funding. They're scheduled to begin
operations in 2017. They've just returned from a two-day road trip to
Illinois to meet with a hydraulics manufacturer about some parts.
Clemmons drove, while Berenthal sent e-mails and made phone calls.
As they grab their bags and head for the door, Clemmons's wife,
Elizabeth, calls out, "Good luck! Bring home lots of money!" She's
wearing a pink shirt printed with the company's logo and "Oggún," the
name of its tractor. In the Afro-Cuban religion known as Santeria, Oggún
is the deity of metalworking. The spirit is a warrior and a protector.
He paves the road ahead—an embodiment of potential and a symbol of hope.

Berenthal had been bugging Clemmons for years about starting a business
in Cuba. He watched the changes on the island, most notably Fidel
Castro's offhand remark in 2010 that the economic model wasn't working.
In December 2014, when President Obama announced that the U.S. would
begin reestablishing diplomatic relations with Cuba, Berenthal called
Clemmons. As he puts it, "I said, 'This is the time. Let's go do it.' "
Despite being a great place to grow things, Cuba imports 80 percent of
its food at a cost of $2 billion per year. Almost 70 percent of its
land, about 19 million acres, is fertile, but only 40 percent is used
for farming and agriculture; 20 percent of the labor force, or about 1
million people, is employed in agriculture. The country has about
200,000 small, privately owned farms, as well as regional co-ops. The
government runs the production of crops such as sugar cane. About 4
million people, 36 percent of the population, depend on agriculture in
some way for their livelihood.
"Cuban farmers all agree that Cuba has the potential to produce more.
All that needs to change is the mechanism of production," says Mario
González-Corzo, a professor of economics at Lehman College at the City
University of New York, who was born and raised in Cuba and specializes
in Cuban agriculture. "When I visit Cuba and talk to farmers, it all
comes down to machinery." Much of the island's equipment is almost 30
years old, pieced together from allies such as China and the former
Soviet Union (González-Corzo's cousin owns a farm in Cuba; his tractor
was built in the 1950s). Maintaining a working tractor has become so
difficult that many farmers have gone back to using animal labor.
"I said, 'Saul, the Cubans will evolve differently than Americans
evolved, but they will start at the same place we started,' " Clemmons
says. "They are going to start at the single-row tractor." By that, he
means a small tractor that will plow one furrow at a time.
More than anything, Berenthal and Clemmons know that Cuba is still Cuba,
and that the Cuban government will want a socially conscious business
model. "If you are going to approach Cuba with 'I want to sell you
something,' it ain't going to work," Berenthal says. "That's not what
they want. They don't want to be dependent and buying from the rest of
the world forever. If you are going to propose a project, it has to have
an economic, social, and cultural justification."

At the presentation, the two address about 15 potential investors.
Clemmons opens, noting that, although they've received calls from
interested parties about Cleber, this is their first official pitch for
seed funding. He then turns the podium over to Berenthal. "Horace is
inspirational, and I am operational," Berenthal says. "I want to try and
get you through how I always try to make happen what he dreams." The
crowd laughs, and Berenthal dives in.
The Oggún may be the world's first open source tractor. The frame of the
Oggún 1.0 base model is an original design but rooted in the
Allis-Chalmers Model G, a mainstay of the postwar farming boom of the
late 1940s and early '50s. (Coincidentally, the Model G was manufactured
in Alabama.) It's a bare-bones design, the tubular frame of which is
reminiscent of a homemade go-cart—sturdy, simple, and open to the
elements. The driver sits high up for visibility; the motor is behind,
bolted to the frame between the rear wheels.
The frame of the Oggún can support an 18- to 25-horsepower gas or diesel
engine. Cleber has seven manufacturers—American, Japanese, British,
German, and Italian—that can supply a compatible motor, allowing more
versatility when sourcing. A series of belts drives two hydrostatic
transaxles—essentially, axles turned without shifting gears—one for each
rear wheel, similar to many lawn tractors. You push the gas pedal and
go. The axles can be widened—from 38 to 60 inches in the front and 36 to
46 inches in the rear—providing versatility when planting rows of crops,
navigating narrow paths, or transporting the tractor in a trailer or the
back of a truck. The rear axles can be loosened using hand tools,
extended outward, and tightened again. At the front, the frame has
notches every two inches. All the farmer has to do is jack it up, remove
the bolts, slide the wheels over, and put the bolts back in.
Additional farming implements can be hooked up to the tractor. The more
popular ones are likely to be a plow to break the ground, a cultivator
to aerate the soil, and a planter to drop in seeds. Under the belly of
the tractor is a hitch system for attaching implements.
Only a handful of components makes up the finished tractor: the frame,
which is split into two parts that bolt together at the center; the
motor and both axles; four rims and tires; the shaft for the front
wheels; the steering wheel and column; the seat; hydraulic fuel tanks;
and gas. "It's excruciatingly simple," Clemmons says.
Oggún 1.0 is expected to retail for $10,000, which is low for a tractor
of this horsepower. The parts would initially be manufactured in the
U.S., sent to Cuba, and assembled by Cuban workers at a planned
66,000-sq.-ft. facility in Mariel, a burgeoning port and special
development zone west of Havana along Cuba's northern coast. As the
business expands, Berenthal explains, the company plans to eventually
manufacture parts on-site and hire more employees. The Cuban government
would take care of human resources, using criteria submitted by Cleber
to find employees and negotiate salaries.
The company could break $100 million in sales within 10 years if all
goes well, Berenthal says. By the second year, the two hope the
Mariel-based facility will be exporting tractors to other countries in
Latin America.
The company's business model has its risks. It's contingent on farmers
having money to buy a tractor or having family in the U.S. who can send
them money to buy one; or on a European banking institution willing to
give out loans; or on the Cuban government, a notoriously fickle and
unpredictable entity, allocating funds in the national budget to
purchase tractors for its residents. "The question really is, can they
provide, or work with the government to offer, some form of financing so
the farmer can afford the cost of the tractor?" says González-Corzo.
After the presentation, Clemmons and Berenthal drive back home to Paint
Rock to eat a late dinner. No one at the conference made any on-the-spot
offers, although a few potential investors said they were intrigued and
expressed admiration. "This was a good test round, a learning
experience," Clemmons tells me in his kitchen, carving slivers off a
block of manchego cheese, while Berenthal eats cereal. "Like I told them
at the beginning, we've never had to ask for money before."
It seems promising, though, that no one questioned the validity of their
idea or the impact it would have on the Cuban people.
"How often do you get the opportunity to make history and money at the
same time?" Clemmons says, munching on a slice of cheese. "All you have
to do is listen to what people need."

The partners are planning to build 16,000 tractors a year

The next day, Clemmons and Berenthal wake up at 5 a.m. After a breakfast
of eggs, bacon, and rye toast with homemade blackberry jelly, they drive
40 miles east to Liberty Steel Fabrication in Fyffe, Ala., for a 9 a.m.
meeting with its owner and president, Kelly Pittman, who's in charge of
designing the facility in Mariel as well as manufacturing many of the
parts for the Oggún 1.0. Details have to be ironed out before the team
presents the plans to Cuban officials and ships a batch of five tractors
to be tested on farms in different parts of the country.
Pittman, round-bellied with thick hands, leads Clemmons and Berenthal
through his plant to a mock-up of their tractor. The men discuss and
debate aspects of the tractor's construction and how that could play
into its assembly once the parts are in Cuba. Should the frame be
separate parts bolted together? How durable is the design? Are they
missing anything?
"We gotta have this one tested, and six more built, and five shipped to
Cuba for July, and I'm counting on you to do it," Clemmons tells Pittman.
"And that's what I'm gonna do," Pittman replies, smiling. "The biggest
thing we gotta do is make sure it lasts—that it doesn't fail when it
gets to work down in Cuba."
After tinkering a bit more, the men sit down and discuss construction
plans for the facility in Mariel. Pittman has designed Cleber's facility
to accommodate three eight-stage assembly lines that, over a four-day,
single-shift workweek, could make 16,000 Oggún tractors per year. "If
I'm putting a part together over and over, it's fast, it's simple,"
Pittman says. "It ain't a rocket we're building here." For the factory
roof, he recommends a tilt-panel design with an insulated roof, a more
durable option that could withstand potential hurricanes. He offers to
bring down experts to oversee construction.

Clemmons explains that he's hiring Pittman not only to erect a building
or fabricate tractor parts but also to help with every aspect. "We're
not just looking at a building, we're looking at an end-to-end process
of turning out 16,000 tractors a year," Clemmons tells him. Berenthal
sits to his left, nodding in agreement. The facility is the linchpin of
their vision, and they trust Pittman's judgment. "We'd like to say,
'Kelly, it's yours—we're dependent on you, not just for the building but
the entire process.' "
Pittman gestures at the plans, which detail the assembly area as well as
a section of offices. "If it's going to be as successful as you say it's
going to be," he says, pointing to the offices on the blueprints,
"you'll need more."
Clemmons laughs and nods to Berenthal. "He was going to retire until he
met me," he says.
The men shake hands, and Clemmons and Berenthal walk out to the parking
lot. "All right, I'm going to get on the road," Berenthal tells his
friend. He has to drive back to North Carolina—an eight-hour trek.
Clemmons walks him to his car. He gives Berenthal a hug.
"I'll see you next week," Clemmons says. "We've got a lot to do."

Source: Cuba's First American-Owned Manufacturer Will Make Tractors -
Bloomberg -
http://www.bloomberg.com/news/articles/2016-06-09/cuba-s-first-american-owned-manufacturer-will-make-tractors